Blueprint
EXHIBIT
99.1
GENERAL FINANCE CORPORATION REPORTS FOURTH QUARTER AND FULL YEAR
RESULTS FOR FISCAL YEAR 2018
PASADENA,
CA – September 5, 2018 – General Finance Corporation
(NASDAQ: GFN), a leading specialty rental services company offering
portable storage, modular space and liquid containment solutions in
North America and in the Asia-Pacific region of Australia and New
Zealand (the “Company”), today announced its
consolidated financial results for the fourth quarter and fiscal
year ended June 30, 2018.
Fourth Quarter 2018 Highlights
●
Total revenues were
$93.8 million, an increase of 28% over the fourth quarter of fiscal
year 2017.
●
Leasing revenues
were $56.5 million, an increase of 23% over the fourth quarter of
fiscal year 2017.
●
Leasing revenues
increased by 13%, excluding the oil and gas sector and favorable
foreign currency effects.
●
Leasing revenues
comprised 63% of total non-manufacturing revenues for the fourth
quarter of both fiscal years 2017 and 2018.
●
Adjusted EBITDA was
$23.0 million, an increase of approximately 49% over the fourth
quarter of fiscal year 2017.
●
Adjusted EBITDA
margin was 25%, compared to 21% in the fourth quarter of
2017.
●
Net loss
attributable to common shareholders was $11.6 million, or $0.44 per
diluted share, compared to a net loss attributable to common
shareholders of $1.8 million, or $0.07 per diluted share, for the
fourth quarter of fiscal year 2017. Included in the fourth quarter
fiscal year 2018 net loss is a non-cash charge of $11.5 million for
the change in valuation of the stand-alone bifurcated derivative in
our outstanding convertible note in the Asia-Pacific area.
Excluding this non-cash charge, the fourth quarter of fiscal year
2018 would have had net income attributable to common shareholders
of approximately $0.1 million.
●
Average fleet unit
utilization was 80%, compared to 77% in the fourth quarter of
fiscal year 2017.
●
Completed one
acquisition in North America.
Fiscal Year 2018 Highlights
●
Total revenues were
$347.3 million, an increase of 25% over fiscal year
2017.
●
Leasing revenues
were $215.0 million, an increase of 22% over fiscal year
2017.
●
Leasing revenues
increased by 12%, excluding the oil and gas sector and favorable
foreign currency effects.
●
Leasing revenues
comprised 64% of total non-manufacturing revenues versus 65% for
fiscal year 2017.
●
Adjusted EBITDA was
$87.7 million, an increase of 44% over fiscal year
2017.
●
Adjusted EBITDA
margin was 25%, compared to 22% for fiscal year 2017.
●
Net loss
attributable to common shareholders was $12.0 million, or $0.46 per
diluted share, compared to a net loss attributable to common
shareholders of $6.6 million, or $0.25 per diluted share, for
fiscal year 2017. Included in the fiscal year 2018 net loss is a
non-cash charge of $13.7 million for the change in valuation of the
stand-alone bifurcated derivative in our outstanding convertible
note in the Asia-Pacific area. Excluding this non-cash charge,
fiscal year 2018 would have had net income attributable to common
shareholders of approximately $1.8 million.
●
Average fleet unit
utilization was 80%, compared to 77% for fiscal year
2017.
●
Opened five
greenfield locations, three in the Asia-Pacific region and two in
North America.
●
Completed four
acquisitions in North America.
●
Acquired all
outstanding publicly-traded shares of Royal Wolf not owned by the
Company, making Royal Wolf a wholly-owned subsidiary.
Management Commentary
“We
are extremely proud of our accomplishments in fiscal year 2018,
delivering record revenues and adjusted EBITDA, driven by growth
across all of our operations,” said Jody Miller, President
and Chief Executive Officer. “We ended the year with an
exceptional fourth quarter. In North America, our liquid
containment business continues to generate strong results, given
the robust customer demand in the oil and gas market in the Permian
basin of Texas. Our core portable storage business delivered
ongoing growth, driven primarily by a larger fleet, increasing
average lease rates and higher fleet utilization across all product
lines. Our Asia-Pacific region also delivered improved financial
results throughout the fiscal year, due to higher sales revenues,
which included three large sales to the utilities sector, as well
as higher leasing revenues across most sectors.”
Mr.
Miller continued, “We executed on our geographic expansion
strategy very well, entering nine new markets, growing our Pac-Van
brand in North America with four acquisitions and two greenfield
locations and strengthening our Royal Wolf brand in the
Asia-Pacific region with three greenfield locations. Subsequent to
the fiscal year-end, Pac-Van acquired a portable storage container
business in the Baltimore/D.C. market, and Royal Wolf acquired a
portable storage container business in New Zealand that operates
eight locations across the country.”
Charles
Barrantes, Executive Vice President and Chief Financial Officer,
added, “Our fiscal year 2018 results exceeded our guidance
and our fourth quarter results mark the sixth consecutive quarter
where we have delivered year-over-year growth in adjusted EBITDA.
Our strong financial results enabled us to enhance our borrowing
availability and end fiscal year 2018 with a net leverage ratio of
under five times, even with the additional debt that we incurred as
a result of our successful acquisition of the public noncontrolling
interest of Royal Wolf.”
Mr.
Miller concluded, “Our outstanding performance in fiscal year
2018 is the result of the hard work and commitment of our operating
teams and our disciplined and focused strategy over the past few
years. We ended the year on a high note and that positive momentum
is continuing, laying a solid foundation for the
future.”
Fourth Quarter 2018 Operating Summary
North America
Revenues
from our North American leasing operations for the fourth quarter
of fiscal year 2018 totaled $57.4 million, compared to $44.9
million for the fourth quarter of fiscal year 2017, an increase of
28%. Leasing revenues increased by 31% on a year-over-year basis,
as a result of increases across nearly all sectors, most notably in
the oil and gas, commercial, construction and industrial sectors.
Sales revenues increased by 20%, driven mainly by increases in the
commercial, oil and gas, construction and government sectors, and
were partially offset by decreases in the mining and education
sectors. Adjusted EBITDA was $17.6 million for the fourth quarter
of fiscal year 2018, compared with $10.9 million for the year-ago
quarter, an increase of 61%. Adjusted EBITDA from Pac-Van and Lone
Star increased by 36% and 164% year-over-year, to $11.8 million and
$5.8 million, respectively, from $8.7 million and $2.2 million,
respectively, in the fourth quarter of fiscal year
2017.
North
American manufacturing revenues for the fourth quarter of fiscal
year 2018 totaled $3.7 million and included intercompany sales of
$0.2 million from products sold to our North American leasing
operations. This compares to $1.7 million of total sales, including
intercompany sales of $0.6 million during the fourth quarter of
fiscal year 2017. On a stand-alone basis, prior to intercompany
adjustments, adjusted EBITDA was $0.5 million for the fourth
quarter, compared to an adjusted EBITDA loss of $0.4 million in the
fourth quarter of fiscal year 2017.
Asia-Pacific
Revenues
from the Asia-Pacific for the fourth quarter of fiscal year 2018
totaled $32.9 million, compared to $27.3 million for the fourth
quarter of fiscal year 2017, an increase of approximately 21%. The
increase in revenues was mainly driven by one large sale to a
customer in the utilities sector totaling $3.8 million and was
accompanied by an increase in sales to the construction sector, as
well as favorable foreign currency effects between periods. Leasing
revenues increased by 7% on a year-over-year basis, with increases
in the mining, construction and special events sectors, partially
offset by decreases in the consumer and agriculture sectors.
Adjusted EBITDA for the fourth quarter of 2018 was $7.5 million,
compared to $6.4 million for the year-ago quarter, an increase of
approximately 18%. On a local currency basis, revenues increased by
19% and adjusted EBITDA increased by 16%.
Fiscal Year 2018 Operating Summary
North
America
Revenues
from our North American leasing operations for fiscal year 2018
totaled $206.3 million, compared to $163.8 million in the prior
year, an increase of 26%. Leasing revenues increased by 30% on a
year-over-year basis, as a result of increases across a majority of
sectors represented in our customer base, most notably in the oil
and gas, commercial and construction sectors. Sales revenues
increased by 16% for the year, driven mainly by increases in the
commercial, oil and gas and construction sectors, and were
partially offset by decreases in the education and mining sectors.
Adjusted EBITDA for fiscal year 2018 was $61.2 million, an increase
of 54% from the prior year. Adjusted EBITDA from Pac-Van and Lone
Star increased by approximately 27% and 210%, to $43.2 million and
$18.0 million, respectively, from $34.0 million and $5.8 million,
respectively, in fiscal year 2017.
North
American manufacturing revenues for fiscal year 2018 totaled $13.6
million and included intercompany sales of $3.7 million from
products sold to our North American leasing operations. This
compares to $6.9 million of total sales during the fiscal year
2017, which included intercompany sales of $2.0 million. On a
stand-alone basis, prior to intercompany adjustments, adjusted
EBITDA was $0.3 million for the fiscal year, compared to an
adjusted EBITDA loss of approximately $1.6 million in the prior
fiscal year.
Asia-Pacific
Revenues
from the Asia-Pacific for fiscal year 2018 totaled $131.1 million,
compared to $108.2 million in the prior year, an increase of 21%.
The increase in revenues was mainly driven by four large sales to
customers in the utilities and transportation sectors totaling
approximately $16.1 million, as well as favorable foreign currency
effects between periods. Leasing revenues increased by 7%, with
increases in the construction, mining, industrial and special
events sectors, partially offset by decreases in the oil and gas
sector. Adjusted EBITDA for fiscal year 2018 was $31.9 million,
compared to $27.4 million in the prior year, an increase of 16%. On
a local currency basis, revenues increased by 18% and adjusted
EBITDA increased by 13%.
Balance Sheet and Liquidity Overview
At June
30, 2018, the Company had total debt of $427.2 million and cash and
cash equivalents of $21.6 million, as compared to $355.6 million
and $7.8 million at June 30, 2017, respectively. At June 30, 2018,
our North American leasing operations had $46.4 million available
to borrow under its $237.0 million credit facility, and our
Asia-Pacific leasing operations had, including cash at the bank,
$31.4 million (A$42.4 million), available to borrow under its
A$134.0 million credit facility.
During
fiscal year 2018, the Company generated cash from operating
activities of $58.8 million, as compared to $35.3 million for
fiscal year 2017. In fiscal year 2018, the Company invested a net
$21.1 million ($19.0 million in North America and $2.1 million in
the Asia-Pacific) in the lease fleet, as compared to $21.8 million
in net fleet investment ($10.7 million in North America and $11.1
million in the Asia-Pacific) in fiscal year 2017.
Receivables
were $50.5 million at June 30, 2018, as compared to $44.4 million
at June 30, 2017. Days sales outstanding in receivables at June 30,
2018, for our Asia-Pacific and North American leasing operations
were 35 and 47 days, respectively, as compared to 49 and 46 days,
respectively, as of June 30, 2017.
Outlook
Assuming
the Australian dollar averages 0.72 versus the U.S. dollar, which
represents an approximate 7% decrease from fiscal year 2018,
management estimates that consolidated revenues for fiscal year
2019 will be in the range of $355 million to $375 million and that
consolidated adjusted EBITDA will increase by 6% to 12% in fiscal
year 2019 from fiscal year 2018. This outlook does not take into
account the impact of any additional acquisitions that may occur
for the remainder of fiscal year 2019.
Conference Call Details
Management
will host a conference call today at 8:30 a.m. Pacific Time (11:30
a.m. Eastern Time) to discuss the Company's operating results. The
conference call number for U.S. participants is (866) 901-5096 and
the conference call number for participants outside the U.S. is
(706) 643-3717. The conference ID number for both conference call
numbers is 7774275. Additionally, interested parties can listen to
a live webcast of the call in the "Investor Relations" section of
the Company's website at http://www.generalfinance.com.
A
replay of the conference call may be accessed through September 19,
2018 by dialing (800) 585-8367 (U.S.) or (404) 537-3406
(international), using conference ID number 7774275.
After
the replay has expired, interested parties can listen to the
conference call via webcast in the "Investor Relations" section of
the Company's website at http://www.generalfinance.com.
About General Finance Corporation
Headquartered
in Pasadena, California, General Finance Corporation (NASDAQ: GFN,
www.generalfinance.com)
is a leading specialty rental services company offering portable
storage, modular space and liquid containment solutions.
Management’s expertise in these sectors drives disciplined
growth strategies, operational guidance, effective capital
allocation and capital markets support for the Company’s
subsidiaries. The Company’s Asia-Pacific leasing operations
in Australia consist of wholly-owned Royal Wolf Trading Australia
Pty Limited (www.royalwolf.com.au)
and Royal Wolf Trading New Zealand Limited (www.royalwolf.co.nz),
the leading providers of portable storage solutions in those
countries. The Company’s North America leasing operations
consist of wholly-owned subsidiaries Pac-Van, Inc. (www.pacvan.com)
and Lone Star Tank Rental Inc. (www.lonestartank.com),
providers of portable storage, office and liquid storage tank
containers, mobile offices and modular buildings. The Company also
owns Southern Frac, LLC (www.southernfrac.com),
a manufacturer of portable liquid storage tank containers and,
under the trade name Southern Fabrication Specialties (www.southernfabricationspecialties.com),
other steel-related products in North America.
Cautionary Statement about Forward-Looking Statements
Statements
in this news release that are not historical facts are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such forward-looking
statements include, but are not limited to, statements addressing
management’s views with respect to future financial and
operating results, competitive pressures, increases in interest
rates for our variable interest rate indebtedness, our ability to
raise capital or borrow additional funds, the availability of
sufficiently qualified employees to staff our businesses, changes
in the Australian, New Zealand or Canadian dollar relative to the
U.S. dollar, regulatory changes, customer defaults or insolvencies,
litigation, the acquisition of businesses that do not perform as we
expect or that are difficult for us to integrate or control, our
ability to procure adequate levels of products to meet customer
demand, our ability to procure adequate supplies for our
manufacturing operations, labor disruptions, adverse resolution of
any contract or other disputes with customers, declines in demand
for our products and services from key industries such as the
Australian resources industry or the U.S. oil and gas and
construction industries, or a write-off of all or a part of our
goodwill and intangible assets. These risks and uncertainties could
cause actual outcomes and results to differ materially from those
described in our forward-looking statements. We believe that the
expectations represented by our forward-looking statements are
reasonable, yet there can be no assurance that such expectations
will prove to be correct. Furthermore, unless otherwise stated, the
forward-looking statements contained in this press release are made
as of the date of the press release, and we do not undertake any
obligation to update publicly or to revise any of the included
forward-looking statements, whether as a result of new information,
future events or otherwise unless required by applicable law. The
forward-looking statements contained in this press release are
expressly qualified by these cautionary statements. Readers are
cautioned that these forward-looking statements involve certain
risks and uncertainties, including those contained in filings with
the Securities and Exchange Commission.
Investor/Media Contact
Larry
Clark
Financial
Profiles, Inc.
310-622-8223
-Financial
Tables Follow-
GENERAL FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
Sales:
|
|
|
|
|
Lease inventories
and fleet
|
$26,448
|
$33,769
|
$95,764
|
$122,467
|
Manufactured
units
|
1,106
|
3,518
|
4,895
|
9,850
|
|
27,554
|
37,287
|
100,659
|
132,317
|
Leasing
|
45,785
|
56,547
|
176,269
|
214,985
|
|
73,339
|
93,834
|
276,928
|
347,302
|
|
|
|
|
|
Costs
and expenses
|
|
|
|
|
Cost of
sales:
|
|
|
|
|
Lease inventories
and fleet (exclusive of the items shown separately
below)
|
19,226
|
23,740
|
68,215
|
87,779
|
Manufactured
units
|
1,420
|
2,946
|
6,336
|
9,212
|
Direct costs of
leasing operations
|
20,485
|
23,511
|
76,306
|
89,201
|
Selling and general
expenses
|
17,449
|
21,426
|
67,705
|
77,650
|
Depreciation and
amortization
|
10,063
|
10,090
|
39,300
|
39,761
|
|
|
|
|
|
Operating
income
|
4,696
|
12,121
|
19,066
|
43,699
|
|
|
|
|
|
Interest
income
|
12
|
31
|
66
|
112
|
Interest
expense
|
(4,557)
|
(9,324)
|
(19,653)
|
(33,991)
|
Loss on change in
valuation of bifurcated derivative in Convertible Note
|
—
|
(11,498)
|
—
|
(13,719)
|
Foreign exchange
and other
|
(281)
|
(3,202)
|
(351)
|
(5,887)
|
|
(4,826)
|
(23,993)
|
(19,938)
|
(53,485)
|
|
|
|
|
|
Loss
before provision (benefit) for income taxes
|
(130)
|
(11,872)
|
(872)
|
(9,786)
|
|
|
|
|
|
Provision (benefit)
for income taxes
|
272
|
(1,198)
|
(25)
|
(679)
|
|
|
|
|
|
Net
loss
|
(402)
|
(10,674)
|
(847)
|
(9,107)
|
|
|
|
|
|
Preferred stock
dividends
|
(892)
|
(892)
|
(3,658)
|
(3,658)
|
Noncontrolling
interests
|
(471)
|
—
|
(2,115)
|
801
|
|
|
|
|
|
Net
loss attributable to common stockholders
|
$(1,765)
|
$(11,566)
|
$(6,620)
|
$(11,964)
|
|
|
|
|
|
Net loss per common
share:
|
|
|
|
|
Basic
|
$(0.07)
|
$(0.44)
|
$(0.25)
|
$(0.46)
|
Diluted
|
(0.07)
|
(0.44)
|
(0.25)
|
(0.46)
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
Basic
|
26,472,633
|
26,418,890
|
26,348,344
|
26,269,931
|
Diluted
|
26,472,633
|
26,418,890
|
26,348,344
|
26,269,931
|
GENERAL FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
|
|
|
Assets
|
|
|
Cash
and cash equivalents
|
$7,792
|
$21,617
|
Trade
and other receivables, net
|
44,390
|
50,525
|
Inventories
|
29,648
|
22,731
|
Prepaid
expenses and other
|
8,923
|
8,023
|
Property,
plant and equipment, net
|
23,388
|
22,310
|
Lease
fleet, net
|
427,275
|
429,388
|
Goodwill
|
105,129
|
109,943
|
Other
intangible assets, net
|
28,769
|
25,150
|
Total assets
|
$675,314
|
$689,687
|
|
|
|
Liabilities
|
|
|
Trade
payables and accrued liabilities
|
$42,774
|
$50,545
|
Income
taxes payable
|
—
|
361
|
Unearned
revenue and advance payments
|
15,548
|
19,226
|
Senior
and other debt, net
|
355,638
|
427,218
|
Fair value of bifurcated derivative in
Convertible Note
|
—
|
15,583
|
Deferred
tax liabilities
|
38,106
|
34,969
|
Total liabilities
|
452,066
|
547,902
|
|
|
|
Commitments
and contingencies
|
—
|
—
|
|
|
|
Equity
|
|
|
Cumulative
preferred stock, $.0001 par value: 1,000,000 shares authorized;
400,100 shares issued and outstanding (in series)
|
40,100
|
40,100
|
Common
stock, $.0001 par value: 100,000,000 shares authorized; 26,611,688
shares issued and outstanding at June 30, 2017 and 27,017,606 at
June 30, 2018
|
3
|
3
|
Additional
paid-in capital
|
120,370
|
139,547
|
Accumulated
other comprehensive loss
|
(12,355)
|
(17,091)
|
Accumulated
deficit
|
(12,972)
|
(21,278)
|
Total
General Finance Corporation stockholders’ equity
|
135,146
|
141,281
|
Equity
of noncontrolling interests
|
88,102
|
504
|
Total equity
|
223,248
|
141,785
|
Total liabilities and equity
|
$675,314
|
$689,687
|
Explanation and Use of Non-GAAP Financial Measures
Earnings
before interest, income taxes, impairment, depreciation and
amortization and other non-operating costs and income
(“EBITDA”) and adjusted EBITDA are non-U.S. GAAP
measures. We calculate adjusted EBITDA to eliminate the impact of
certain items we do not consider to be indicative of the
performance of our ongoing operations. In addition, in evaluating
adjusted EBITDA, you should be aware that in the future, we may
incur expenses similar to the expenses excluded from our
presentation of adjusted EBITDA. Our presentation of adjusted
EBITDA should not be construed as an inference that our future
results will be unaffected by unusual or non-recurring items. We
present adjusted EBITDA because we consider it to be an important
supplemental measure of our performance and because we believe it
is frequently used by securities analysts, investors and other
interested parties in the evaluation of companies in our industry,
many of which present EBITDA and a form of adjusted EBITDA when
reporting their results. Adjusted EBITDA has limitations as an
analytical tool, and should not be considered in isolation, or as a
substitute for analysis of our results as reported under U.S. GAAP.
We compensate for these limitations by relying primarily on our
U.S. GAAP results and using adjusted EBITDA only supplementally.
The following tables show our adjusted EBITDA and the
reconciliation from net loss on a consolidated basis and from
operating income (loss) for our operating segments (in
thousands):
|
|
|
|
|
|
|
|
Net
loss
|
$(402)
|
$(10,674)
|
$(847)
|
$(9,107)
|
Add (deduct)
—
|
|
|
|
|
Provision
(benefit) for income taxes
|
272
|
(1,198)
|
(25)
|
(679)
|
Loss on
change in valuation of bifurcated derivative in Convertible
Note
|
-
|
11,498
|
-
|
13,719
|
Foreign
exchange and other
|
281
|
3,202
|
351
|
5,887
|
Interest
expense
|
4,557
|
9,324
|
19,653
|
33,991
|
Interest
income
|
(12)
|
(31)
|
(66)
|
(112)
|
Depreciation
and amortization
|
10,261
|
10,212
|
40,092
|
40,335
|
Share-based
compensation expense
|
532
|
672
|
1,374
|
3,658
|
Refinancing
costs not capitalized
|
-
|
-
|
437
|
-
|
Adjusted
EBITDA
|
$15,489
|
$23,005
|
$60,969
|
$87,692
|
|
Quarter Ended June 30, 2017
|
Quarter Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss)
|
$1,837
|
$4,986
|
$(583)
|
$(1,702)
|
$3,040
|
$11,532
|
$329
|
$(2,974)
|
Add
(deduct) -
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
4,405
|
5,839
|
198
|
9
|
4,261
|
6,012
|
122
|
9
|
Share-based
compensation expense
|
134
|
109
|
14
|
275
|
192
|
77
|
9
|
394
|
Adjusted EBITDA
|
$6,376
|
$10,934
|
$(371)
|
$(1,418)
|
$7,493
|
$17,621
|
$460
|
$(2,571)
|
Intercompany adjustments
|
|
|
|
$(32)
|
|
|
|
$2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss)
|
$10,768
|
$15,635
|
$(2,430)
|
$(5,507)
|
$13,272
|
$37,487
|
$(351)
|
$(7,278)
|
Add
(deduct) -
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
16,699
|
23,329
|
792
|
28
|
17,098
|
23,394
|
574
|
36
|
Share-based
compensation expense
|
(74)
|
374
|
62
|
1,012
|
1,513
|
350
|
46
|
1,749
|
Refinancing
costs not capitalized
|
----
|
437
|
----
|
----
|
----
|
---
|
----
|
----
|
Adjusted EBITDA
|
$27,393
|
$39,775
|
$(1,576)
|
$(4,467)
|
$31,883
|
$61,231
|
$269
|
$(5,493)
|
Intercompany adjustments
|
|
|
|
$(156)
|
|
|
|
$(198)
|